MBA Advocacy Update June 20, 2023
- Ginnie Mae Expands Use of Electronic Signatures and Remote Online Notarization
Last week, Ginnie Mae announced that they will expand the use of electronic signatures in conjunction with Remote Online Notarization (RON) to include power of attorney (POA) mortgage documents. All Ginnie Mae Issuers can now use RON to execute POA documents when necessary to securitize through Ginnie Mae Single-Family government insured or guaranteed loans on “paper” mortgages.
• Why it matters: Ginnie Mae hopes that this expanded program will benefit service members and others who cannot execute loan documents in person through the traditional process. This updated policy is another great step in the modernization of Ginnie Mae’s Mortgage-Backed Securities (MBS) program and enables flexibilities that will benefit issuers and borrowers.
• What’s next: Additional details can be found in via All Participants Memorandum (APM) 23-09. MBA will remain engaged with Ginnie Mae on this and other critically important policy issues.
For more information, please contact Sasha Hewlett at (202) 557-2805.
- HUD OIG Releases Report on COVID-19 Loss Mitigation
The Department of Housing and Urban Development’s (HUD) Office of the Inspector General (OIG) released an audit report broadly examining the loss mitigation options that loan servicers provided to borrowers with Federal Housing Administration (FHA)-insured loans after their COVID-19 forbearance ended. Based on a statistical sample of 231,362 loans, the audit report concluded that servicers did not provide proper loss mitigation assistance to approximately two-thirds of delinquent borrowers after their COVID-19 forbearance ended by identifying various technical errors. The audit reports review period covered loans whose borrowers exited their COVID-19 forbearance between October 2021 and February 2022.
• Why it matters: The OIG report measured loan servicers technical compliance with HUD’s rapidly changing loss mitigation guidelines throughout the COVID-19 pandemic. By the OIG’s own admission, the audit report does not consider borrower outcomes. As MBA President and CEO, Bob Broeksmit, CMB stated, “Today’s report from the OIG confirms what we all know – the COVID-19 pandemic presented unprecedented challenges to homeowners, servicers, and the federal agencies like HUD that administer loan guarantee programs. . . But make no mistake, by focusing on delivering positive outcomes for homeowners, servicers implementation of COVID-19 relief is a major success story.”
• What’s next: MBA continues to believe that achieving positive borrower outcomes was more significant than technical compliance during the pandemic. We will continue to push back on narratives that would further discourage participation in FHA’s program or lessen the willingness to be similarly responsive in future disaster situations.
For more information, please contact Brendan Kelleher at (202) 557-2779.
- CFPB Director Chopra Publishes Blog Post on Mortgage Servicing Rules
Last Thursday, the Consumer Financial Protection Bureau (the Bureau) published a blog post identifying the need to simplify and streamline their mortgage servicing rules. The Director recognized that the changes to loss mitigation made during the COVID-19 pandemic showed that mortgage servicing rules could be revised to reduce unnecessary complexity. The responses from the Bureau’s RFI on the mortgage servicing rules noted that borrowers face “paperwork treadmills” that harm borrowers and mortgage servicers because of the delay caused by those rules. Additionally, the blog post also highlights a possible future focus on negative credit reporting and servicer fees. The RFI is available here. MBA’s response to that RFI can be accessed here.
• Why it matters: The blog post follows MBA recent petition for the Bureau to engage in rulemaking on the Regulation X early intervention requirements and loss mitigation procedures. In our letter, MBA recommended that the Bureau amend early intervention requirements, create a clear standard describing when a borrower has submitted a loss mitigation application, and ensure mortgage servicers can timely assist distressed borrowers in any market condition. MBA’s letter can be accessed here.
• What’s next: MBA will continue to monitor proposals from the Bureau and will keep members informed about any updates.
For more information, please contact Brendan Kelleher at (202) 557-2779 or Gabriel Acosta at (202) 557-2811.
- MBA Offers Recommendations to FHA on HECM Borrower Payments If Lender Defaults
Last Monday, MBA submitted comments to the FHA draft mortgagee letter that proposed modifications to the Home Equity Conversion Mortgage (HECM) Requirements Related to Secretary Payment of Borrower Disbursements Due to Mortgagee Default. Based on feedback from MBA members, the letter highlights additional steps FHA should take to further FHA’s policy objectives of strengthening HECM market stability and reducing costs to the Mutual Mortgage Insurance Fund (MMI Fund), including accepting the assignment of all HECMs immediately after the Ginnie Mae 98% buyout; and accepting loans that become due and payable or delinquent after reaching Maximum Claim Amount (MCA) as an assignable buyout.
• Why it matters: In expanding FHA’s authority to investigate late payments to borrowers and obtain payment information, FHA is improving its ability to promptly comply with its statutory responsibility to provide payments to HECM borrowers upon a mortgagee’s default.
• What’s next: MBA will continue monitoring this draft ML proposal and inform members of any updates.
For more information, please contact John McMullen at (202) 557-2706.
- CFPB Director Testifies Before Congress
CFPB Director Rohit Chopra appeared before both the House Financial Services and Senate Banking committees last week for his Semi-Annual Report to the Congress. Per custom, he fielded questions from lawmakers on policy initiatives undertaken by the Bureau. A summary of both hearings can be found here and here.
• Why it matters: Director Chopra was repeatedly asked about the potential impact on the mortgage market were the Supreme Court to find that the CFPB’s funding structure is unconstitutional. Lawmakers also focused on CFPB governance and operations, overdraft fees, credit reporting, and 1071 rulemaking concerns.
• What’s next: The Supreme Court is expected to hear the case of Consumer Financial Protection Bureau v. Community Financial Services Association of America, Limited in October with a decision expected in the late winter or Spring of 2024.
For more information, please contact Ethan Saxon at (202) 557-2913 or Bill Killmer at (202) 557-2736.
- House Ways and Means Committee Marks Up Tax Legislation
On June 9, House Ways and Means Committee Chairman Jason Smith (R-MO) unveiled a tax package known as the American Families and Jobs Act. The package includes three bills: the Tax Cuts for Working Families Act, the Small Business Jobs Act, and the Build It in America Act. This legislation was marked up in the Committee on Tuesday. MBA sent a letter outlining the real estate finance industry’s perspective on the legislation and reinforcing our support for enacting housing-related tax provisions – for both renters and homeowners alike – as part of any tax package that may emerge in House/Senate negotiations later this year.
• Why it matters: The Smith package focuses on business tax provisions that have expired or would be scaled down in coming years, e.g., the research & development (R&D) credit, bonus depreciation, and interest expensing. The package does not include any housing provisions but would temporarily increase the standard tax deduction for individuals and married couples. The package is silent with respect to the child tax credit, which Democrats believe to be a crucial element within any end-of-year deal.
• What’s next: Chairman Smith’s goal was to produce an economic tax package that can garner the vote of every Republican in the House later this summer. This effort is the first step in staging negotiations for: 1) a potential end-of-year tax deal, and 2) the 2025 tax “showdown” when much of the 2017 Tax Cuts and Jobs Act expires and will need to be addressed in some form or fashion.
For more information, please contact Alden Knowlton at (202) 557-2741 or Borden Hoskins at (202) 557-2712.
- Secretary Yellen Testifies Before House Financial Services Committee
Last Tuesday, Treasury Secretary Janet Yellen testified before the House Financial Services Committee. Her appearance fulfilled her statutory mandate to appear before the Committee to discuss the state of the international financial system. Naturally, several other topics were raised including environmental, social, and governance (ESG) disclosures, bank capital and BASEL III, community development financial institution (CDFI) regulations, treasury bond auctions, and the national debt. A complete summary of the hearing can be found here.
• Why it matters: The hearing is an opportunity for Congress to raise concerns and issues within the Treasury Department’s vast jurisdiction.
• What’s next: Secretary Yellen has yet to appear before the Senate Banking Committee to fulfill her full congressional reporting mandate. MBA will work with Congress to ensure relevant topics are potentially raised during her next appearance.
For more information, please contact Alden Knowlton at (202) 557-2741 or Borden Hoskins at (202) 557-2712.
- Federal Reserve Maintains Federal Funds Rate
The Federal Reserve in its ongoing efforts to slow inflation decided to hold the federal funds rate to a target range of 5.00-5.25% on Wednesday.
• Why it matters: The FOMC emphasized that, “holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”
• MBA’s SVP and Chief Economist Mike Fratantoni noted, “Inflation is coming down, but slowly. Multiple indicators suggest the economy here and abroad, will slow significantly in the near term, but the job market continues to appear resilient in the most recent data. With this muddled picture, it is not surprising that the FOMC held rates steady at its June meeting – but kept their options open for July and later this year. Nevertheless, we expect that the Fed is at the top of its rate hiking cycle.”
For more information, please contact Mike Fratantoni at (202) 557-2935.
- [VIDEO]: mPower Moments: On the Importance of Collaboration with Citizens Bank’s Deb Jones
In this mPower Moments episode, mPower Founder Marcia M. Davies sits down with Deb Jones, CMB, SVP of Capital Markets at Citizens Bank. Jones talks about her career journey in capital markets and how she has seen a significant uptick in women joining and thriving in the sector. During the insightful interview, Jones also discusses the importance of engaging with industry peers to ensure you’re adapting to the latest developments and issues.
• What’s next: To watch more mPower Moments, click here.
For more information, please contact Marcia Davies at (202) 557-2707.
- Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely programming that covers the spectrum of
challenges, obstacles and solutions pertaining to our industry. Below, please see a list of
upcoming webinars – which are complimentary to MBA members:
• Expanding Homeownership through a Commitment to DEI – June 21
• How to Leverage Document AI for Unparalleled Efficiency in Loan Production and Loan Servicing – June 27
• Mastering Revenue Metrics of Construction to Permanent Loans – July 18
• Managing Costs and Compliance of Lead Generation in a Purchase Market – July 19
• Office Doldrums: Challenges, Opportunities, and Nuances – July 26
MBA members can register for any of the above events and view recent webinar recordings.
For more information, please contact David Upbin at (202) 557-2931.
